The manager of a MINC analyzed the percent change in the value of the dirham value (AED) on the inflation differential between the Europe and UAE and estimated a coefficient of 0.78. Thus, for every 1% increase in the inflation differential, the UAE dirham is expected to depreciate by 0.78%.

The above statement is True, because when (UAE Inflation rate minus EU Inflation rate) increases 1%, then ceteris paribus, there is an increasing pressure on airham and euro is depreciated.

The above statement is False, because when (EU Inflation rate minus UAE Inflation rate) increases 1%, then ceteris paribus, there is an increasing pressure on dirham and euro is depreciated.

The above statement is False, because when (UAE Inflation rate minus EU Inflation rate) increases 1%, then ceteris paribus, there is an increasing pressure on dirham and euro is depreciated.

The above statement is True, because when (EU Inflation rate minus UAE Inflation rate) increases 1%, then ceteris paribus, there is an increasing pressure on dirham and euro is depreciated.